Austin uses economic growth model Madison could follow

The central Texas city focuses on public-private partnerships, high-tech businesses and embracing its identity

Published On: Jul 09 2013 12:06:21 PM CDT

By Brennan Nardi

The night before I flew to Austin to research this article, I was in the second row of the Orpheum Theatre’s balcony, rocking out to Garbage. The band’s lead singer Shirley Manson hails from Scotland, but the rest of these bona fide rock stars—Butch Vig, Steve Marker and Duke Erikson—are from Madison and their ’90s smash hits—like "Queer," "Stupid Girl" and "Only Happy When it Rains"—were recorded at the band’s now-defunct Smart Studios on East Washington Avenue. And, oh, by the way, Vig produced Nirvana’s 1991 Nevermind, forever branding him as a music industry stud and causing Rolling Stone magazine to float Madison as the next music Mecca.

Didn’t happen.

Manson, an outgoing rebel with a cause, loves to schmooze the hometown crowd when they play here. On this visit, she talked about having formed a cultural bond with Madison during the band’s formative years.

"You like to work as a clan," is how she characterized our liberal Midwestern enclave and its progressive vibe. "I’m very proud to say we grew up here in a city that is tolerant of other beliefs."

It was a nice compliment that cut through the clutter of the last few years of political tensions and divisions that have shaken Madison’s identity. Manson says her globetrotting Garbage tours helped her appreciate a core Madison value: openness toward one another regardless of race, sex, religion or sexual orientation.

The next day, as my plane lifted toward Texas, I settled in to re-read Richard Florida’s seminal book on the economy of the future, The Rise of the Creative Class. His widely debated (some say debunked) theory boils down to this: Cities that possess the "3Ts" of economic development—technology, talent and tolerance—are magnets for creative-class workers who can drive regional growth and prosperity.

"The rise of the Creative Economy," writes Florida, "is drawing the spheres of innovation (technological creativity), business (economic creativity) and culture (artistic and cultural creativity) into one another, in more intimate and more powerful combinations than ever." Heck, he just described Garbage and Smart Studios.

According to Florida’s statistical analysis of the 3Ts, Madison ranked number one in regions with 250,000–500,000 people in "the Creativity Index," which measures high-tech industrial output, patents per capita and diversity as defined by a greater-than-average share of gay couples (read: tolerance). When he compared the larger, Big Daddy regions of a million or more, San Francisco took the top spot and Austin ran a close second.

So, let’s see … Richard Florida deems us tolerant. Shirley Manson seconds it. And, while we’re no match in size, Madison ten years ago was tracking with the San Frans and Austins of the world. This should feel like a fist-bump moment, but it’s not. Here’s why. Granted, San Francisco is much larger than Madison, but it birthed Craigslist and Twitter. And granted, Austin is warmer, but it birthed South By Southwest, which has become so ubiquitous that satellite festivals are spinning off as we speak. Why didn’t the qualities that sprouted Smart Studios seed Madison’s own garden of innovation and entrepreneurship?

Madison is nothing if not special—we tell ourselves that—but maybe, I thought, what’s special is the way we hold onto some problems when we’d be better off letting go. Do we have a disconnect between public resources and private enterprise? Did we bet the farm on biotech? Is our mindset too much of a town-versus-gown mentality? Are we too dependent on government jobs? Austin, I thought, might have something to say about the answers to these questions, particularly since Atlanta-based consultant Mac Holladay of Market Street Services authored Austin’s wildly successful economic development strategy and has now written a new one, just for Madison.

So off I went, to drink Austin’s brand of Kool-Aid

KEEPING AUSTIN WEIRDTurns out, Kool-Aid tastes pretty weird in Austin. Which is just how they like it.

"Keep Austin Weird" bumper stickers and T-shirts are sold throughout the city and snatched up by tourists (I brought home one of each). They amplify the progressive, geek-is-cool vibe that attracts hippies, techies and intellectuals in droves to the flagship University of Texas campus and a dozen other higher-ed institutions, which then spill new graduates out into the local workforce like shiny VW bugs rolling off the assembly line.

When Richard Florida visited Madison in 2002 to plug The Rise of the Creative Class, he gushed about Austin: a university town and a blue city awkwardly inhabited by a red-state Capitol, with a lovely waterscape—the Colorado River runs through Austin, and its city reservoir is called Lady Bird Lake.

But as Florida’s creative class treatise was climbing the charts, Austin’s economy was tanking.

First came the burst of the dot-com bubble in 2000. A year later, September 11. On the whole, the nation’s economy went from hum to ho-hum. But Austin, home to Dell computers, a burgeoning software and IT hub, and the annual music, film and interactive festival South By Southwest, seriously lost its mojo.

"We lost about 38,000 jobs in central Texas, which were not just any 38,000, they were our best 38,000 out of the tech industry," recalls Gary Farmer, president of Heritage Title insurance company, a proud Longhorns alum, and an influential Austinite who fought like heck to find the right formula—he calls it the secret sauce—that would mend the broken economy of his beloved Austin, "Tex-izzz," as he drawls it. Farmer wasn’t worried about keeping Austin weird; he was focused on the tax base, on the housing market, on employee retention, on his bottom line.

"Going from thirteen semiconductor fabrication plants to five; having city tax collections fall by ten or twelve percent. The city was actually laying off employees. Not just through attrition but actually closing libraries, closing the swimming pools,” Farmer recalls.

Few people know this part of Austin’s story, but listening to Farmer tell it, I wondered if it was the crisis that was needed to pull Austinites together?

I met with him in his beautifully appointed boardroom on the fifteenth floor of the swanky Frost Bank Tower in the heart of downtown Austin. The building edges the trendy Warehouse District, where Facebook took up residence in 2010. Looking west beyond the city, the luscious green hill country fades into the horizon. Equal parts git-’er-done exec and polite Southern gent, the affable Farmer canceled his haircut halfway through our interview after realizing how hungry I was for his secret sauce recipe. He—and the mayor and a chamber of commerce VP and the head of the city’s economic development office—talked with me about Opportunity Austin 1.0. They discussed the project’s symbiotic relationship—a truly combined and coordinated effort—between the public and private sectors in language I had never heard uttered on the isthmus back home.

Under the Austin model, economic development is agnostic about where the jobs come from, as long as they come. And come they have, at least to Austin.

“We were supposed to create 72,000 jobs under Opportunity Austin 1.0,” says Farmer. “We created 124,000.” From 2006 to 2011, that region saw a 13.1 percent increase in business establishments, according to the U.S. Census. In contrast, Madison dropped by 5.4 percent. It’s worth noting that his city is now implementing Opportunity Austin 3.0.